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The dividend yield of Intel is currently 4.9% (based on stock price as of 1/8/2013). If you buy...

Question:

The dividend yield of Intel is currently 4.9% (based on stock price as of 1/8/2013). If you buy shares of Intel with funds contributed to your IRA the dividends will be taxed but not the capital gains.

True

False

Dividends:

Dividend refers to the amount which is paid to the shareholders after paying the preference dividends. The dividend is paid as a reward to the stockholders for bearing risk by making financial contributions to the capital of the company.

Answer and Explanation:

False

Explanation:

The dividends earned will not be taxable as they were purchased by using the IRA funds. When the individual is in the higher tax bracket, the dividends and capital gains will be taxable when they cross the maximum limit that is allowed as a deduction.


Learn more about this topic:

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What Is Dividend Yield? - Definition & Calculation

from Corporate Finance: Help & Review

Chapter 2 / Lesson 10
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